USD/MXN recovers modestly from two-month lows, remains under 22.00
|- Mexican peso continues to appreciate in June amid risk appetite.
- USD/MXN confirms break below 22.00 and weakens further.
The USD/MXN reached the lowest since March 16 at 21.56 and then rebounded modestly rising to the 21.80 area. Despite moving off lows, the pair is about to post the lowest close in almost two months.
Risk appetite continues to push USD/MXN to the downside. The Mexican peso rose for the fourth time in a row versus the greenback. The US dollar dropped against most of its rivals, however, the yen was the worst performer hit by the ongoing improvement in market sentiment.
Among emerging market currencies, the Brazilian real outperform on Tuesday after Monday’s slide. The Colombia peso also rose sharply, gaining almost 2% versus the US dollar.
USD/MXN: Next target 21.30?
The pair is hovering around the 100-day moving average, after trading below for the first since February. The negative bias remains in place, although the extreme oversold readings warn about some correction or a slowdown in the rally of the Mexican peso.
The next support in USD/MXN stands at 21.60 and a consolidation below would likely target 21.30 (horizontal support and also the 62.8% Fibonacci retracement of the recent rally that started in February.
On the upside, a correction could find resistance at 22.00 and above at 22.20 (50% retracement) and 22.50.
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